New problem loan rate hits six-year low in March
May 6 2013 2:48PM
After the financial meltdown, the value of homes for sale in Los Angeles was severely affected by an influx of foreclosures, but as the housing market gains traction, foreclosures have become less an issue.
According to Lender Processing Services' March Mortgage Monitor, the newly delinquent loan rate hit the lowest level since 2007. It currently sits at 0.84 percent, dropping close to the pre-crisis average of 0.55 percent.
Rising home prices have been one of the driving factors behind the reduced rate of newly delinquent loans.
"There has always been a clear correlation between higher levels of negative equity and new problem loan rates," said Herb Blecher, senior vice president at LPS.
Prices have been on the upswing for the better part of the past year, and that trend continued in February. According to the Standard & Poor's/Case-Shiller Home Price Indices, both the 10- and 20-city composites improved on a monthly and annual basis.
Los Angeles had a 1 percent improvement from the previous month and 14.1 percent gain from a year ago at this time.
As home prices continue to increase, homeowners in Palm Springs should regain the equity lost during the financial downturn.
